CHINA Great Wall Computer Shenzhen Co. Ltd. has signed an agreement to establish a new joint venture with IBM to produce computer servers for the Asian region, the company announced in Beijing on Sunday (Dec 12th).

The agreement to form the International Systems Technology Company (ISTC) was signed Sunday and the company would be based in Shenzhen.

With its headquarters in the science and technology park in Nanshan, the new joint venture will be the world's largest server manufacturing base in the next two to three years.

A factory will also be established in the Futian Free Trade Zone.

Sales of the joint venture are expected to reach US$1 billion next year, press reports, citing company officials, said.

International Business Machines (IBM) will hold 80 percent of the stake in the venture with Great Wall taking the rest.

The deal came after China Great Wall sold its 20 percent stake in its 10-year-old personal computer joint venture with IBM -- International Information Products (Shenzhen) Co. Ltd. (IIPC) -- last week for an unspecified sum to the U.S.-based computer maker.

This happened ahead of the blockbuster US$1.25 billion takeover last week of IBM's entire personal computer business, including its 80 percent stake in IIPC, by the Lenovo Group, China's largest personal computer manufacturer.

Formal operations of ISTC are due to begin in the second quarter of 2005.

At the end of last year, IBM claimed to be the world's largest server vendor, with 31.6 percent of the global market.

Editor: Wing